Nomura: Key Measures Of Exuberance Don't Show Complacency

In July, the market’s most commonly used measure of volatility, the VIX, plunged to a 23-year low of 9.04, the lowest level since December 1993. As Reuters pointed out at the time, if the index had closed at this level, it would have been the lowest close in history. The lowest level ever recorded was 8.83 in December 1993. Are we experiencing irrational exuberance? Maybe not.

Since July, barring one jolt in August when it hit 16, Wall Street’s ‘fear gauge’ has remained below 14, significantly below its long-term average of 20. Some analysts have claimed that the depressed volatility is a sign of just how complacent investors and traders have become with the market, which seems to lack...